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Strategies & Market Trends : Dividend investing for retirement
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To: Tom C who wrote (6053)10/11/2010 7:48:18 PM
From: Cogito Ergo Sum  Read Replies (1) of 34328
 
Hi Tom,
Using a dollar as my cost per share that means my yield on cost is 20%. Pretty good huh, but the reality is that my yield on cost is exactly the same as it was when the stock was priced at $15 and exactly the same as it was a few years ago. It could go up to $30 tomorrow and my yield on cost would still be 20%. Capital appreciation is a good problem to have but it has little to do with cost on yield.

Maybe I'm misunderstanding or expressing myself poorly...

I buy a stock @ 100$ and it's paying 5%... my yield on cost is 5%.. two years later the stock is up 50%.. so now trading @ 150$.. my yield on cost is still 5%... current yield is 3.33%... My yield on cost is still 5% ... what I'm getting for what I paid.. but I have trouble not locking in that 50% cap gain.. Nothing has changed with my yield on cost.. Now it could get exciting if the divi was raised by say 10%...which would be actually about 3.6% current yield and I guess a yield on cost of about 5.6% :O) And yes I agree completely that if the shares split yield on cost is the same..

So back to my original post.. I look at the % return from cap gains over a period and measure that against the yield on cost.. and taking various factors into account.. I may decide to lock in the cap gains... that's all...
EDIT: actually if I used current yield against cap gains.. it could make the cap gain comparison look a lot richer than it really is... so yes yield on cost is important to me..

TBS
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